Conversion Ratio and Conversion Price
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Diamond Drill Inc. has 150,000 shares and 15,000 warrants outstanding. A warrant holder can purchase a new share of stock for five warrants and $5.00 per warrant. The stock is currently selling for $27 per share.
a) The holder of a $1,000 face value bond can exchange the bond any time for 25 shares of stock. The conversion ratio is:
b) The holder of a $1,000 face value bond can exchange the bond any time for 25 shares of stock. The conversion price is:
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The solution explains how to calculate the conversion ratio and conversion price.
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